How to make good decisions

Decisions. As a leader you are tasked with making decisions every day. Some are small day-to-day decisions. Some are large decisions that set the direction of your organization.

Other decisions are made in times of crisis or pressure. These high stakes decisions are often the ones that bring emotional and physical tension and high desire or perceived need to “get it right.”

Top-tier leaders know this is a losing proposition. They know they are much more likely to make a poor decision when the stakes are high. These leaders don’t have some mysterious sixth sense that helps them perform in such situations. Leaders who excel at decision-making have studied how good decisions get made, and they actively implement tactics that improve their odds of a successful outcome.

Often pressured decisions occur because there is some sort of time deadline under which a decision has to be made.

Other pressured decisions occur because the potential for loss from a poor decision is catastrophic to the organization.

Most frequently the toughest decisions have both components: a time deadline under which a decision must be taken - which is often short - and a condition of high risk.

Colin Powell, the former chairman of the Joint Chiefs and former Secretary of State, was fond of saying that tough decisions have to be made on incomplete information. You always want to collect as much information as you can, but if you wait to collect all the information you can, you will likely exceed the time window for a successful outcome. This is a key dynamic tension in decision-making.

So - the first thing you can do when faced with a high-stakes decision is to validate these two variables of time and risk. Is the time deadline firm? Is the risk of the outcome fully known? If either of these variables can be adjusted, then do so. Extend your time for making a decision if you can, or reduce the risk related to a poor outcome if you can, or both.

It is important you know why validating these variables is important if you are to make a good decision. What underlies these elements are the key behavioral traits of decision-making.

According to psychologists, including Nobel Prize winner Daniel Kahneman, our brains have two fundamental pathways for making decisions. The first pathway is intuitive, emotional and quick. Think of your “gut” reaction to a problem. This is a powerful part of our decision-making process - but these fast, emotionally laden decisions don’t take the time to reflect on all relevant facts. The second pathway is the more deliberate logical pathway. Our brains are great at evaluating data, but to undertake this task requires slower, more methodical work.

You need both pathways to address a difficult decision. Extending the timeframe allows both parts of your brain to acquire the information and factors that may best inform a good decision.

Many leaders and teams I work with tend to try to jump to a solution to a problem too quickly. In my work with leaders from around the globe at Harvard Business School, we are consistently advising these professionals to “stay in the problem” and do a full root cause assessment of any situation before moving to potential solutions and a decision.

If one can use whatever time available to do this type of deep dive into a problem, a true sense of the risks and pressures can be identified. This slowing down, and bringing both decision-making pathways to work on a decision tends to lead to better outcomes.

You are still likely to be working with Powell’s concept of incomplete information in making your decision. Top-tier leaders recognize that making sequential decisions can therefore be a better approach to difficult decisions that a global decision.

In other words, if you can form a response that allows you to iterate on your decision in real time or develop contingency options as you move forward, you may further reduce the risk to the problem you face.

Leaders study great decision-making. That’s how they get good at it. It's a leadership skill that can be learned - and that is a great thing for your organization and your team.

Stuart Danforth is the director of Positive Leadership Dynamics in Wayland. He can be reached at www.positiveleadershipdynamics.com.